Wells aims to resolve probe over lending to blacks

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Justin Blum and Tom Schoenberg, Bloomberg News

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4:00 am PDT, Thursday, July 28, 2011

A customer walks up to a Wells Fargo & Co. bank branch in Orlando, Florida, U.S., on Monday, June 13, 2011. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., announced plans to open as many as 2,000 branches, more than half of them in Florida and California, targeting states dominated by Bank of America Corp., the biggest U.S. bank by deposits, and Wells Fargo & Co., which has the largest branch network. Photographer: Phelan M. Ebenhack/Bloomberg
Ran on: 07-06-2011
Wells Fargo of San Francisco has chosen Kevin McQuilkin to oversee mergers and acquisitions for industrial companies.
Ran on: 07-28-2011
Last week, Wells Fargo was fined $85 million over claims that it steered buyers into subprime loans. less

A customer walks up to a Wells Fargo & Co. bank branch in Orlando, Florida, U.S., on Monday, June 13, 2011. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., announced plans to open as many as 2,000 ... more

Photo: Phelan M. Ebenhack, Bloomberg

Photo: Phelan M. Ebenhack, Bloomberg

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A customer walks up to a Wells Fargo & Co. bank branch in Orlando, Florida, U.S., on Monday, June 13, 2011. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., announced plans to open as many as 2,000 branches, more than half of them in Florida and California, targeting states dominated by Bank of America Corp., the biggest U.S. bank by deposits, and Wells Fargo & Co., which has the largest branch network. Photographer: Phelan M. Ebenhack/Bloomberg
Ran on: 07-06-2011
Wells Fargo of San Francisco has chosen Kevin McQuilkin to oversee mergers and acquisitions for industrial companies.
Ran on: 07-28-2011
Last week, Wells Fargo was fined $85 million over claims that it steered buyers into subprime loans. less

A customer walks up to a Wells Fargo & Co. bank branch in Orlando, Florida, U.S., on Monday, June 13, 2011. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., announced plans to open as many as 2,000 ... more

Photo: Phelan M. Ebenhack, Bloomberg

Wells aims to resolve probe over lending to blacks

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Wells Fargo & Co., the biggest U.S. home lender, is negotiating with the Justice Department to resolve a probe of whether the lender directed blacks to subprime loans, a person familiar with the matter said.

The investigation is being conducted by the Justice Department's Civil Rights Division and involves the lender's actions during the housing bubble, said the person, who wasn't authorized to speak publicly.

Wells Fargo, based in San Francisco, still faces a 2008 lawsuit by the city of Baltimore alleging a "pattern or practice of illegal and discriminatory mortgage lending" leading to foreclosures on Wells Fargo loans in minority neighborhoods.

And last week, the bank agreed to pay a record $85 million fine and compensate clients to settle Federal Reserve claims that it steered reliable borrowers into subprime loans and falsified information in mortgage applications.

Employees at the firm's Wells Fargo Financial unit pushed customers who may have been eligible for prime interest rates into loans carrying higher rates intended for riskier borrowers, the Fed said in a July 20 statement announcing the accord.

Separately, sales personnel used false documents to make it appear borrowers qualified for loans when their incomes made them ineligible, the Fed said.

Vickee Adams, a spokeswoman for Wells Fargo, and Alisa Finelli, a Justice Department spokeswoman, declined to comment on the U.S. discriminatory lending investigation. Of the Baltimore case, Adams said the bank is "confident in our position in the lawsuit."

Under its settlement with the Fed, Wells Fargo must reevaluate qualifications of borrowers who received a subprime, cash-out refinancing loan between January 2006 and June 2008.

The fine was the largest assessed by the regulator in a consumer-protection enforcement case, according to the statement. The bank didn't admit wrongdoing in agreeing to settle, the government said.

The U.S. settlement talks were reported earlier in the Huffington Post news and opinion web site.